SBICAP Securities has recommended a buy rating on Patel Engineering Company with a target of Rs 490 in its September 17, 2008 research report. “At the current price of Rs 370, assuming full tax rate of 33%, the stock trades at a P/E multiple of 17.4x its FY09E consolidated EPS of Rs 21.2 and at 14.3x its FY10E consolidated EPS of Rs 25.9. On an EV/EBIDTA basis, it trades at 8.8x FY09E and 7.7x FY10E. We value the real estate subsidiary at Rs 185 per share, BOT subsidiaries at Rs 13 per share and assign a conservative 12x P/E multiple to its core construction business’s standalone FY10EEPS of Rs 24.4. Thus,arriving at an SOTP value of Rs 490 per share (an upside of 32% from the current level),we recommend a BUY on the stock,” says SBICAP Securities’ research report.
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